Largest platinum ETF sees biggest outflow

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PlatinumJewellery

REUTERS

A saleswoman displays platinum rings.

London - The world's largest platinum-backed exchange-traded fund, Johannesburg-listed NewPlat ETF, recorded its largest weekly outflow since its launch in April last year, data from the fund showed on Monday.

NewPlat, which is operated by Absa Capital, said its holdings fell 8,046 ounces last week to 901,294 ounces.

While that outflow is equivalent to just 0.9 percent of its total holdings, this is the first time the fund has recorded a decline of more than a few thousand ounces at a time, according to Reuters data.

Over the last three months, the fund has averaged weekly inflows of around 10,000 ounces a week.

The outflow was recorded at the end of last week, as platinum prices fell nearly 2 percent, with emerging markets leading a global sell-off in risky assets.

The metal had risen to a 2-1/2 month high at the start of last week ahead of strike action at South African mines producing half the world's platinum, though it quickly retreated.

“Flows into the fund will depend on price, and the duration of the strikes,” VTB Capital analyst Andrey Kryuchenkov said. “I would say in the near term, there is still a good chance for a further contraction.”

Interest in the fund exploded after its launch, with South African investors switching their exposure to platinum prices into physical metal from mining stocks, which had been hurt by labour unrest and rising costs.

The fund also appeals to South African buyers because it is denominated in rand, enabling them to invest in platinum, which is usually denominated in dollars, without having to eat into a 35 percent maximum allocation they can have in foreign assets. - Reuters


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